Monday, May 08, 2006

Just a few trade posts - Sold Heinz, bought EURUSD, bought Euro$.

Sold my Heinz long position (£5/point) at 42.31, had bought it at 37.95,
so £2,180 profit. I almost feeling like I'm doing the cardinal sin of
taking my profits and running my losses (since my IAC Corp trade is
under water)...but 1) I can't resist, 2) I am beginning to get bearish
on risky assets and 3) I could do with turning over stuff much more
frequently if I'm going to make any decent money this year!

Also bought just £2/tick on EURUSD Jun '06 at 1.2748. Tiny size I know,
but I want to start doing a few trades where I increase my exposure as
it starts to move my way, and using stop losses also. So if EURUSD moved
up well into 1.28 area I'll buy some more and move the stop up to the
average purchase price. Have set an initial stop-loss at 1.2720, so not
much margin for error. We'll see how this goes!

And finally, I am really coming round to the opinion that the FED really
will peak at 5%. I have been so bearish on rates for a while, for
instance when all anyone talked about was how it was reasonable for the
curve to be inverted at 4.25%-4.50% rates, I stayed short 10yrs all the
way through. And now I feel like the contrarion trade is now to be long
Treasuries. Claims data is inching up, payrolls just disappointed, and
rates are really starting to bite into homeowners mortgage payments. As
we speak, I just bought £50/tick of Mar '07 Eurodollars at 94.67 ie.
its pricing in 3m rates at 5.33% in March next year. I think the market
may have to start pricing in rate cuts later this year, or at worst no
more rate hikes. Bernanke has been (reasonably) clear about going to 5%
then stopping for a while, so we could see the start of this happening
this week after the FED hikes.

And since this could be the turning point for the economy, I should
really by considering shorting stocks. But the market seems to want to
take the DOW up to its old highs (about 150 points higher) so maybe now
is not the exact moment. I may use options to get in since the market is
pretty squeezy, so don't want an outright short as it could easily run
up a few hundred points in my face in this market! Looking into the
options now...


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17 May, 2006 12:28  
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17 May, 2006 12:45  

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